Risks of corruption in REDD+ in Indonesia Ahmad Dermawan 15th International Anti Corruption Conference Brasilia, 8 November 2012
Structure Context REDD+ in Indonesia Why corruption risks? Lessons from Reforestation Fund Implications for corruption risks in REDD+ Conclusions
Context Law enforcement agencies: Corruption Eradication Commission Financial Intelligence Unit Supreme Audit Agency Moratorium Decentralization Spatial planning
REDD+ in Indonesia REDD+ regulatory frameworks and institutions Nastra, National REDD+ Task Force (10 Working Groups, including Legal Review), REDD+ Safeguards Development of REL and independent MRV system MRV system, carbon accounting method, development of single map REDD+ project preparation 40+ pilot projects, demonstration activities, Ecosystem restoration concessions Management and distribution of REDD+ revenues Discussions are still taking place
Why corruption risks in REDD+ Licensing REDD+ operates within existing forest concession systems MRV MRV and financial management capacity is still weak, particularly at local government level Benefit sharing Potential revenues from REDD+ will be larger than existing revenues from timber exploitation
What can Indonesia s Reforestation Fund tell us about the corruption risks?
Financial management and revenue administration The Fund was under discretionary management outside state budget; reforestation vs other irrelevant uses of the Fund; local government has limited capacity to manage it Capital subsidies and accountability Approximately $1 billion of the Fund was used to support timber plantation development, but most subsidy recipients did not fully plant their plantation sites, and have not fully repaid their loans Corruption and fraud Some recipients of subsidies marked up their investment costs or overstated their planted areas; corruption related to the Fund has become decentralized
What does it mean for corruption risks in REDD+
Readiness phase Development of regulatory frameworks and institutions Policy inconsistencies Avoiding forest conversion, moratorium Manipulation of baseline data Unclear land title and tenure rights Poor coordination Agriculture and mining sector excluded in policy discussions, planning pluralism (MP3EI vis-àvis REDD Strategy)
Implementation phase Implementation of emission reduction activities Obstacles in licensing Getting a license is extremely cumbersome National vs subnational tensions Provincial/District government technical recommendations for licensing becomes political blessings Non compliance License holders do not meet their obligations
Performance assessment and payment MRV and performance-based payments Manipulation of data Misreporting the production data for tax evasion Poor financial and revenue management No regular balance cross-checks, poor capacity esp. at local government Misuse of REDD+ revenues What is REDD+ money for? How will it be distributed? Who decides on allocation/ distribution? Who will benefit?
Conclusions Corruption risks may occur in all REDD+ phases Transparency in licensing process is essential MRV principles should be applied not only to carbon emission reductions, but also financial management and governance Preventing the risks does not only involve improving the management in the forest sector, but also financial governance
Relevant publications Angelsen, A., Brockhaus, M., Sunderlin, W.D., and Verchot, L.V. (eds) 2012 Analysing REDD+: Challenges and choices. CIFOR, Bogor, Indonesia. Barr, C., Dermawan, A., Purnomo, H., and Komarudin, H. 2010. Financial governance and Indonesia s Reforestation Fund during the Soeharto and post-soeharto periods, 1989 2009: a political economic analysis of lessons for REDD+. Occasional paper 52. CIFOR, Bogor, Indonesia. Dermawan, A., Petkova, E., Sinaga, A., Mumu Muhajir, M. and Indriatmoko, Y. 2011. Preventing the risk of corruption in REDD+ in Indonesia. CIFOR Working Paper 80. United Nations Office on Drugs and Crime and Center for International Forestry Research, Jakarta and Bogor, Indonesia. Luttrell, C., Obidzinski, K., Brockhaus, M., Muharrom, E., Petkova, E., Wardell, A., Halperin, J. 2011. Lessons for REDD+ from measures to control illegal logging in Indonesia. CIFOR Working Paper 74. United Nations Office on Drugs and Crime and Center for International Forestry Research, Jakarta and Bogor, Indonesia. Myers-Madeira, E., Sills, E., Brockhaus, M., Verchot, L., and Kanninen, M., What is a REDD+ pilot? A preliminary typology based on early actions in Indonesia. CIFOR Infobrief No. 26. CIFOR, Bogor, Indonesia. Santoso, T., Chandra, R., Sinaga, A.C., Muhajir, M. Mardiah, S. 2011 A guide to investigation and indictment using an integrated approach to law enforcement. CIFOR, Bogor, Indonesia.
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